KazMunaiGas (KMG) Oil And Gas Company Approves A New Organizational Structure

KazMunaiGas (KMG) Oil And Gas Company Approves A New Organizational StructureWhether the national company Kazakhstan need transformation? According to experts, the interference in the work of the companies may reduce their effectiveness.

Recently, when the subject turns to the national companies of Kazakhstan, immediately pops up the word “transformation” – a complete analysis of the company, its liberation from all the excess and retarding as well as the search for new horizons of development, after which the company should accelerate its work and to increase profitability, writes Corresponding business information center Kapital.kz.

However, according to experts, this decision seems very ambiguous. Recall of JSC NC “KazMunaiGas” recently oil and gas company’s board of directors approved a new organizational structure. As explained in the press service of the EP: “This is a logical step of the transformation program of the national company for the transition to a new operating model, according to which the EP refuses to portfolio investor concept and move to the active operational management of production assets.”

Under the new operating model, it is understood that the EP will go to the direct management of its subsidiaries and affiliated organizations. That is, all created and developed infrastructure of the enterprise will be reorganized. So, the first step in this process was an attempt to absorption of shares of its “daughters” of JSC “Exploration Production” KazMunaiGas “. However, minority shareholders of KMG EP have refused such an offer national company, which, by the way, and so has a controlling stake – 57.9%, as in the case of rising oil prices, the company has the most favorable prospects. As a result, the absorption of KMG EP has not happened, but it happened with the company whose shares are not part of the first year is available on the market.

And what will happen to those subsidiaries whose share capital is 100% owned national oil and gas operator? These areas are engaged in activities in the country of JSC “KazTransOil” and “KazTransGas”. So, to date, “KazTransOil” JSC is the largest oil pipeline company of Kazakhstan, which only last year transported 51% of Kazakh oil produced. JSC “KazTransGas” – the largest in the Central Asian region, the gas transmission system operator, serving 54 thousand km of gas pipelines and managing a single system of internal gas.. These two national operators are quite effective in their areas of the company, with an already well-aligned management verticals, experienced staff, developed in the years ahead the development of strategies. And, according to analysts, the intervention in the scope of their work is likely to reduce the effectiveness of a low quality of the services they provide.

For example, if we analyze the oil and gas industry in other countries, almost all production and transportation of oil and gas – is a separate, independent infrastructure. If we take for example the gas industry, it is displayed in a separate energy sector in mind the scale and its specificity. In Japan, the gas industry has been Tokyo Gas, England British Gas, finally, the nearest neighbor runs a well-known Russian Gazprom and separately Rosneft.

Meanwhile, the director of the Public Fund Financial Freedom Rasul Rysmambetov believes that it is better to pay attention to the further development of these companies, than on their “absorption”.

“In my view a common approach can not be – it all depends on the financial performance of individual companies and their infrastructure. In addition, a significant factor is the vertical integration of the oil and gas companies and their co-existence in the market. In Kazakhstan, the gas sector has not yet been consolidated, is not adjusted gas processing and export of products of the second and third repartition that is forcing our exports depend heavily on simple raw materials and the development of these areas is necessary to pay attention to investing these directions. Therefore, I strongly against the transfer of the gas industry in the parent holding company, the decision wrongly “, – the expert believes.

That is, tasks that are currently facing the oil and gas complex of the country, should be directed to the “mainstream” strengthen the position of domestic oil and energy markets, and not on their repartition, the analyst believes.

It should be noted that, as stated in last year, “KazTransGas” was able to fully meet the south of the country’s own gas deciding deficit and dependence on imports. And if the companies would be given the opportunity to develop and have the state support in the implementation of promising investment projects, the question to provide gas to the northern regions would also be resolved. This support needs and “KazTransOil”, began intensive work on the modernization of the existing system of main oil pipelines and diversification of oil supplies.